Prashant Paroda, Senior Portfolio Manager at Allspring Global Investments, believes investors should remain patient amid the recent sell-off in Indian equities, as the uncertainty surrounding the Iran-US conflict and rising crude oil prices weigh on markets. According to reports from CNBC TV18, Paroda says the current phase could pass once a geopolitical resolution emerges, adding that investors should focus on their time in the markets rather than trying to time them. He notes that the stalemate between Iran and the US is concerning for India as oil prices continue to climb, with President Trump tweeting that he would hold off on new attacks until the midterms, but from an investor's perspective, this uncertainty remains a concern. As Paroda explains, "These things can reverse pretty quickly as soon as a resolution is found. So, people have to be patient and wait for these clouds to clear."
As reported by CNBC TV18, Allspring is selectively adding to Indian positions and evaluating upcoming IPOs, depending on their pricing. Paroda explains that India has borne the brunt of the sell-off over the last month, with one of the large funds repositioning and perhaps selling a lot of holdings in India. He notes that there is definitely new primary market activity happening as well, with several IPOs further down the line, and the firm is closely evaluating them if the pricing is right. The portfolio manager emphasizes that people have to be patient, as typically it's your time in the markets that counts, not timing the markets. He notes that some funds that were absolutely underweight have cut their underweight positions ahead of the announcement and are now aghast at what the price has done since the announcement came through.
According to CNBC TV18, from a 12–18 month perspective, Paroda sees potential in beaten-down large private sector banks, particularly those where management changes have taken place. He believes earnings growth, improving valuations and the easing of merger-related headwinds could support a recovery in the sector. The portfolio manager notes that banks have been beaten up a lot and are reaching some fair valuation, with the Indian economy not doing as badly as people think when looking at the stock market. He expects that as these companies continue to compound earnings, there could be an opportunity for turnaround, especially for large private sector banks that have been beaten up a lot. As Paroda explains, "From a long-term perspective, I know banks have been beaten up a lot. We think they are reaching some fair valuation. If they continue to compound earnings, and the Indian economy is not doing as badly as people think when looking at the stock market, there could be an opportunity."
As reported by CNBC TV18, Paroda believes that a lot of the work done on branch networks over the last two to three years will benefit banks going forward. He thinks it's been a long phase of not doing as well, but the merger-related headwinds will probably start abating over the next 12 months. The portfolio manager feels very positive about deposit growth prospects over the next 18 months, with a seasoned manager joining who has worked across different businesses and understands large banking in India. He notes that some funds that were absolutely underweight have cut their underweight positions ahead of the announcement and are now aghast at what the price has done since the announcement came through.
